RBA expected to hold as inflation cools and housing weakens

The Reserve Bank of Australia is expected to keep its policy rate unchanged at its August meeting, according to previews of the decision. The case for a hold rests on inflation continuing to cool, which reduces pressure for further tightening, and on evidence of weakness in housing, which argues against additional restriction. Recent data from the mortgage market, including a sharp drop in loan applications reported by Westpac, points to slowing credit demand. Attention is likely to focus on the accompanying statement for guidance on how the bank weighs the disinflation trend against domestic demand.